REFILE-PRECIOUS-Gold slips, set for biggest annual loss in 32 years

Mon Dec 30, 2013 10:09am EST

* Gold under pressure from firm equities

* SPDR gold holdings fall 3 tonnes on Friday

* Nov. China imports from Hong Kong down 42 pct

By Clara Denina

LONDON, Dec 30 (Reuters) - Gold fell in thin holiday trade on Monday, heading for its biggest annual loss in more than three decades at nearly 30 percent, as rising appetite for risk and the prospect of a global recovery tarnished its allure.

European stocks hovered around five-year highs after two weeks of strong gains, following from a six-year peak in Japanese shares.

"What's currently driving investors is the idea that commodities are out of fashion and equities are in demand," Quantitative Commodity Research owner Peter Fertig said.

"And, with low inflation pressures, there is still some downside risk for gold as long as the stock market remain relatively robust."

Gold is usually seen as an hedge against inflation, which has stopped to be a concer for investors for the time being.

Spot gold fell to a session low of $1,200.79 an ounce in earlier trade and was down 0.6 percent to $1,205.40 by 1456 GMT, while U.S. gold futures for February delivery slipped $9.00 to $1,204.90 an ounce.

"For the time being, price moves will be exaggerated by the lack of liquidity ... but in the absence of any fresh macro news I don't think we are going to break below $1,190 or above $1,225," MKS SA head of trading Afshin Nabavi said.

Gold's performance in 2013 has put an end to 12 straight years of growth, with prices hit by the U.S. central bank's decision to rein in its monetary stimulus, which will raise the opportunity cost of holding the non-yielding asset.

Expectations that the U.S. economy will improve and the rest of the world's growth will stabilise in 2014, have further undermined the case for holding bullion, as investors look to put their money in riskier assets like equities.

In wider markets, the dollar fell 0.4 percent versus a basket of currencies as the 10-year U.S. notes yield steadied below an earlier two-year high.

FUND HOLDINGS FALL

Heavy outflows from gold-exchange traded funds also reflected investors' diminishing interest. Holdings on SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell three tonnes on Friday to their lowest since Jan. 2009 at 801.2 tonnes.

The physical market saw a few deals among trading houses and jewellers, keeping premiums for gold bars steady at $2 an ounce to the spot London prices in Hong Kong, a centre for bullion trading in East Asia.

Premiums in Singapore were steady at $1.50 an ounce to the spot London prices, but there wasn't much activity.

China's net gold imports from Hong Kong fell 42 percent to 76.393 tonnes in November from 131.19 tonnes in October, reflecting a drop in demand after strong purchases in previous months.

Silver fell 1.9 percent to $19.67 an ounce. Silver is down 35 percent this year in its worst annual performance since at least 1982.

Spot platinum was down 1.2 percent at $1,355.50 an ounce, snapping four consecutive sessions of gains. Spot palladium was up 0.6 percent to $711.97 an ounce. (Additional reporting by Lewa Pardomuan in Singapore; Editing by William Hardy)

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